The latest UK retail sales data, released at 8:00 a.m. Polish time, exceeded market expectations. Contrary to the anticipated decline, the data revealed a substantial year-over-year increase, marking the largest monthly rise since April 2021.
UK Retail Sales for January:Monthly main measure: 3.4% (expected 1.5%, previous -3.2%)Annual main measure: 0.7% (expected -1.4%, previous -2.4%)Monthly baseline measure: 3.2% (expected 1.7%, previous -3.3%)Annual baseline measure: 0.7% (expected -1.5%, previous -2.1%)GBP/USD Technical Outlook: H4 Time FrameThe GBP/USD pair is currently testing a crucial short-term supply zone between 1.2613 and 1.2595. A Bearish Engulfing pattern indicates potential weakness in bullish momentum, suggesting a possible return to a downward trend. Key intraday support is identified at 1.2572, with a breakout below this level signaling a shift to a more bearish short-term sentiment. The significant short-term support remains at the 1.2517 level (February 5th, 2024 swing low).
Current Technical Observations:Price Relative to Moving Averages:The price is currently below both the 100-period EMA (Exponential Moving Average) and the 50-period DEMA (Double Exponential Moving Average), which may suggest bearish sentiment in the market.If the price remains below these averages, they may act as dynamic resistance levels.Bearish Engulfing Pattern:There is a bearish engulfing candlestick pattern visible on the chart, indicating potential bearishness. This pattern occurs when a larger bearish candle fully encompasses the body of the previous bullish candle, suggesting that sellers have overtaken buyers.Relative Strength Index (RSI):The RSI is hovering just below the midpoint (50), which indicates a neutral to slightly bearish momentum. If the RSI continues to decline, it could suggest increasing bearish momentum.Current general sentiment is predominantly bullish (57% bullish vs. 43% bearish). Last week also showed a bullish trend (53% bulls vs. 47% bears), though the sentiment over the past three days has shifted to bearish (45% bulls vs. 55% bears).
Weekly Pivot Points:Upper levels: WR3 - 1.26951, WR2 - 1.26671, WR1 - 1.26519Pivot Point: 1.26391Lower levels: WS1 - 1.26239, WS2 - 1.26111, WS3 - 1.25831Trading Scenarios:Bearish Continuation:If the price fails to break above the moving averages and the RSI continues to trend downwards, we might expect further declines. A break below the green support line could confirm a bearish continuation and potentially lead to testing lower levels.Bullish Reversal:A bullish scenario would involve the price breaking above the moving averages and the RSI climbing above 50. This could indicate a change in momentum and may lead to testing higher resistance levels. A close above the red resistance lines would be a strong bullish signal.Conclusion: The GBP/USD pair is showing signs of bearish momentum, with key resistance levels above and support levels below. Traders should watch for a break or bounce from these levels to confirm the direction. As always, it's crucial to consider the impact of upcoming economic events and news releases when trading, as these can significantly affect currency prices.
Useful LinksMore ArtclesInstaForex Course for BeginnersOpen Trading AccountImportant NoticeThe begginers in forex trading need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp market fluctuations due to increased volatility. If you decide to trade during the news release, then always place stop orders to minimize losses.
Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes. For successful trading, you need to have a clear trading plan and stay focues and disciplined. Spontaneous trading decision based on the current market situation is an inherently losing strategy for a scalper or daytrader.
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